Park city boutique brewery management forecasts that if

Reference no: EM13388975

Park City Boutique Brewery management forecasts that if the firm sells each case of Special Homebrewed for 20 dollars then the demand for the product will be 15,000 cases per year. If they raised the price per case ten percent then they expect demand to fall to 90 percent of the expected sales at the current price of 20 dollars per case. The firm's variable cost per case is ten dollars and the total fixed cash costs for the year are 100,000 dollars. Depreciation and amortization charges are 20,000 dollars and the firm has a 30 percent marginal tax rate. Management anticipates it will need to increase working capital by 3,000 dollars for the year, regardless of the pricing of the product. What will be the effect of the price increase on the firm's free cash flow for the year?

Reference no: EM13388975

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